To the Members of Pricol Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Pricol Limited("the Company") which comprise the standalone Balance Sheet as at March 312020 the standalone Statement of Profit and Loss (including other comprehensive income)the standalone Statement of Changes in Equity and standalone Statement of Cash Flow forthe year then ended and notes to the standalone financial statements including a summaryof significant accounting policies and other explanatory information (hereinafterreferred to as "standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards prescribed under Section 133 of the Act readwith the Companies (Indian Accounting Standards) Rules 2015 as amended ("IndAS") of the state of affairs (financial position) of the Company as at March 312020 and loss (financial performance including other comprehensive income) changes inequity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder Section 143(10) of the Act. Our responsibilities under those SAs are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion on the standalonefinancial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our audit report.
|S.No. Key Audit Matters ||How our audit addressed the Key Audit Matter |
|1 Adoption of Ind AS 116 - Leases: ||Our audit procedures with respect to adoption of Ind AS 116 include: |
|Ind AS 116 introduces a new lease accounting model wherein lessees are required to recognize a right-of- use (ROU) asset and a lease liability arising from a lease on the balance sheet. ||? We assessed the selection of accounting policies and practical expedients applied by the Company. We evaluated the design and implementation of key controls in respect of the lease accounting standard (Ind AS 116); |
|The Company has adopted Ind AS 116 with effect from 1st April 2019 using the modified retrospective approach wherein the ROU was created with a corresponding lease liability. Accordingly the comparatives have not been retrospectively adjusted. ||? Assessed the company's evaluation on the identification of leases based on the contractual agreements and our understanding of the business; |
|Lease arrangements in the Company which were previously classified as operating leases under Ind AS 17 'Leases' and held off balance sheet will need to be recognized within assets and liabilities under Ind AS 116. ||? Assessed the key terms and conditions of each lease with the underlying lease contracts; |
|Significant judgements are required in the assumptions and estimates made in order to determine the ROU asset and lease liability. The assumptions and estimates include application of practical expedients selection of accounting policy choices assessment of lease term determination of applicable incremental borrowing rate among others. ||? Evaluated the reasonableness of the discount rates applied in determining the lease liabilities; |
|Additionally there is a risk the lease data which is underlying the Ind AS 116 computation is incomplete and inaccurate. ||? Upon transition as at 1 April 2019: |
|As at 31st March 2020 the carrying amount of ROU asset was 3307.93 Lakhs and lease liability was 2533.48 Lakhs Refer Note 2.2 on Right of Use Asset Note 2.25 and Note 2.31 on Other Financial Liabilities to the Standalone Ind AS financial statements. ||? Evaluated the method of transition and related adjustments; |
| ||? Tested completeness of the lease data used in computing ROU asset and the lease liabilities. |
| ||? Assessed and tested the presentation and disclosures relating to Ind AS 116. |
|2 Provisions for pending legal cases: ||Assessing the adequacy of provisions by discussing with the management and reviewing correspondence with the respective authorities; |
|As at March 31 2020 the Company has a provision of Rs. 697.48 Lakhs as against various outstanding litigations of Rs. 3974.89 Lakhs. ||Relying on judicial pronouncements; |
|These provisions are estimated using a significant degree of management judgement. ||Obtaining views from the company's external legal advisors regarding the likely outcome magnitude and exposure to the relevant litigations and claims. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises the information included in theAnnual report for example Directors' Report and Management Analysis including Annexuresthereon but does not include the standalone financial statements and our Auditor's reportthereon.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the standalone financial statements or our knowledgeobtained during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this information we are required to report that fact. We have nothing to report inthis regard.
Management and Board of Directors Responsibility for
the Standalone Financial Statements:
The Company's Management and Board of Directors are responsible for the matters statedin Section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the state of affairs profit or loss(including other comprehensive income) changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read withrelevant rules issued thereunder.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe standalone financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.
In preparing the standalone financial statements the Management and Board of Directorsare responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Management either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.
The Management and Board of Directors are also responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
? Identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
? Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of theAct we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.
? Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
? Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
? Evaluate the overall presentation structure and content of the standalone financialstatements including the disclosures and whether the standalone financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication
Report on Other Legal and Regulatory Requirements
(1) As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of Section 143 ofthe Act we give in "Annexure 1" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
(2) As required by Section 143(3) of the Act we report that:
a. We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;
b. In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;
c. The standalone Balance Sheet the standalone Statement of Profit and Loss thestandalone Statement of Changes in Equity and the standalone Cash Flow Statement dealtwith by this Report are in agreement with the books of account;
d. In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with relevant rulesissued thereunder;
e. On the basis of written representations received from the directors as on March 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164 (2) of theAct; f. With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2".
g. With respect to the matter to be included in the Auditors' Report under Section197(16) of the Act;
In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of Section 197 of the Act.
h. With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements Refer Note 2.48 on Contingent Liabilitiesto the standalone financial statements;
(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts Refer Note 2.47 to the standalone financial statements;
(iii) Dues of Rs. 7.08 Lakhs and Rs. 14.01 Lakhs to Investor Education and ProtectionFund (IEPF) pertaining to FY 2010-11 and FY
2011-12 respectively have remained unpaid as on 31st March 2020 on account of certaintechnical glitches with MCA portal. The due dates for transferring the said amounts toIEPF were October 17 2018 and October 06 2019. The same has since been remitted on July08 2020 and July 20 2020 respectively.
For VKS Aiyer & Co. Chartered Accountants ICAI Firm Registration No. 000066S
V S Srinivasan
Partner Membership No. 13729 UDIN: 20013729AAAACT3183
Coimbatore 29th July 2020
ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 1 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Pricol Limitedon the standalone financial statements for the year ended March 31 2020]
(i) a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) During the year fixed assets have not been physically verified by the management.However there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets.
c) The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the Company are held in the name of the Company.
(ii) The inventory (excluding stocks lying with third parties) has been physicallyverified by the management during the year. In respect of inventory lying with thirdparties these have substantially been confirmed by them. In our opinion the frequency ofverification is reasonable. As informed material discrepancies noticed on physicalverification carried out during the year have been properly dealt with in the books ofaccount.
(iii) The Company has granted loans secured or unsecured to companies firms limitedliability partnerships or other parties covered in the register maintained under Section189 of the Act.
a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the terms and conditions of theaforesaid loans granted by the Company are not prejudicial to the interest of the Company.
b) The schedule of repayment of principal and payment of interest in respect of suchloans has been stipulated and the repayments or receipts are regular except for the loanto its wholly owned subsidiary Pricol Espana S.L.Spain. The company has since made anapplication and obtained the approval of the authorised dealers / relevant authority forconversion of the said loan into equity investment.
c) In respect of loans granted to companies firms Limited Liability Partnerships orother parties listed in the register maintained under Section 189 of the Act there are noamounts overdue for more than 90 days.
(iv) Based on information and explanation given to us in respect of loans investmentsguarantees and securities the Company has complied with the provisions of Section 185 and186 of the Act to the extent applicable.
(v) In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public within the provisions of Sections 73to 76 of the Act and the rules framed there under with regard to the acceptance ofdeposits.
(vi) We have broadly reviewed the books of account maintained by the Company in respectof products where the maintenance of cost records has been specified by the CentralGovernment under subsection (1) of Section 148 of the Act and the rules framed there underand we are of the opinion that prima facie the prescribed accounts and records have beenmade and maintained. However we have not made a detailed examination of the same.
(vii) a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insurance incometax goods and services tax customs duty cess and any other material statutory duesapplicable to it.
According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income tax goods andservices tax customs duty cess and any other material statutory dues applicable to itwere outstanding at the year end for a period of more than six months from the date theybecame payable.
b) According to the information and explanation given to us the dues outstanding withrespect to income tax sales
tax service tax value added tax customs duty excise duty on account of any disputeare as follows:
|Name of the Statute ||Nature of dues ||Amount ||Period to which the amount relates ||Forum where dispute is pending ||Deposits paid under Protest |
| ||i) Service Tax ||150.57 || ||High Court || |
| ||ii) Excise Duty ||674.96 || || || |
|Central Excise Act / ||iii) Customs Duty ||208.10 ||1998-99 to 2016-17 ||CESTAT || |
|Service Tax Act / ||iv) Penalty ||218.06 || || ||87.76 |
|Customs Act ||v) Customs Duty ||8.95 || ||Joint Secretary - Ministry of Finance || |
| ||vi) Excise Duty ||112.29 || ||Departmental adjudication || |
| ||vii) Customs Duty ||49.35 || ||Departmental adjudication || |
| ||CST ||301.83 ||2009-10 to 2013-14 ||Additional Commissioner || |
| ||CST ||17.15 ||2014-15 ||Joint Commissioner Appeals ||6.40 |
| ||VAT ||516.41 ||2011-12 to 2013-14 ||Joint Commissioner Appeals || |
|Central Sales Tax Act ||CST ||17.29 ||2012-13 to 2017-18 ||Assistant Commissioner || |
| ||CST ||3.48 ||2007-08 ||Appellate Authority || |
| ||CST ||1.51 ||2017-18 ||Superintendent Audit Circle ||2.69 |
| ||CST ||12.59 ||2011-12 to 2015-16 ||Deputy Commissioner || |
|Goods and Services Tax Act ||GST ||74.34 ||2017-18 ||Departmental adjudication || |
|Total || ||2366.88 || || || |
(viii) According to the information and explanations given to us the Company has notdefaulted in repayment of loans or borrowings to financial institutions and banks. Thereare no outstanding dues to government or dues to debenture holders.
(ix) In our opinion and according to the information and explanations given to us theCompany has not raised money by way of initial public issue offer / further public offer(including debt instruments). Money raised by way of term loans have been applied by thecompany for the purposes for which they were raised.
(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement.
(xi) According to the information and explanations given
to us managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.
(xii) In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Therefore paragraph 3(xii) of the Order is not applicableto the Company.
(xiii) According to the information and explanations given to us all transactionsentered into by the Company with the related parties are in compliance with Sections 177and 188 of Act where applicable and the details have been disclosed in the financialstatements etc. as required by the applicable accounting standards.
(xiv) The Company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review. Thereforeparagraph 3(xiv) of the Order is not
applicable to the Company.
(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him duringthe year.
(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.
For VKS Aiyer & Co. Chartered Accountants ICAI Firm Registration No. : 000066S
V S Srinivasan
Partner Membership No. : 13729 UDIN: 20013729AAAACT3183
Coimbatore 29th July 2020
ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT
[Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'in the Independent Auditor's Report of even date to the members of Pricol Limitedon the standalone Ind AS financial statements for the year ended March 31 2020]
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of PricolLimited ("the Company") as of March 31 2020 in conjunction with our audit ofthe standalone financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India ("ICAI"). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing specified under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness.
Our audit of internal financial controls over financial reporting included obtaining anunderstanding of internal financial controls over financial reporting assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls Over Financial
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the financial statements.
Inherent Limitations of Internal Financial Controls
Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.
For VKS Aiyer & Co. Chartered Accountants ICAI Firm Registration No. : 000066S
V S Srinivasan
Partner Membership No. : 13729 UDIN: 20013729AAAACT3183
Coimbatore 29th July 2020